What is Multifamily Financing?

Multifamily financing is a mortgage used for the refinancing or purchase of properties that have 5 or more residential units like apartment complexes. Multifamily loans are a really good starting out point for seasoned investors and those who are looking to invest for the first time.

Four Reasons to Invest in a Multifamily Property

  • A Better Market

    According to research done by Real Capital Analytics, multifamily investors enjoyed better terms for funding than those in other types of commercial real estate. Mortgage rates debt service coverage ratios were lower and loan to value ratios are generally higher than other investments in the same space.

  • Millennials are Driving the Market Demand

    According to the US Census Bureau, the homeownership rate amongst millennials ages 25-29 was 31% in 2016- 33% lower than the average. For millennials aged 30-34, it was 45%. Regardless of the circumstances, the millennial generation either can’t or won’t own a home and, as a result, are renting. They tend to value flexibility and mobility as opposed to ownership of property which has led to the emergence of ridesharing companies like Uber and Lyft as well as Airbnb.

  • Revenue Stability Even in an Economic Downturn

    Typical leases for the commercial real estate market are 5 years long. Multifamily leases are usually one year, allowing for flexibility to raise rent especially in times when the economy is doing well. When the economy is stagnant or in decline, rent values stay relatively steady allowing multifamily investors to keep revenue stable when property values are down.

  • Baby Boomers are Living It Up

    As baby boomers lean toward retirement, they are tending to choose to live in retirement villages or other amenity-filled luxury living properties they rent. Baby Boomers, unlike Millennials, can afford to purchase a home, but renting a smaller space that is managed by someone else is enticing. The National Housing Council and National Apartment Association cited that renters 55 years of age and above account for more than 30% of the rental market.

Loan Terms

Before opting into a loan agreement, it’s important to identify exactly which loan is right for your unique investment situation. Use this list of loan guidelines as a resource to help you make the best choice:

Loan Amount $250,000 up to $5 MM
Property Type Multi Family (5+ units) & Mixed-Use
Loan Terms 12 or 18 month term
Lien Position First position only
LTV Up to Max 70% of the As Repaired Value
AS IS LTV/LTC Up to Max of 80% AS IS LTV and LTC
Occupancy Non-owner occupied Mixed-Use - minimum of 50% occupied
Debt Yield Minimum Debt Yield 6%
Debt Service Debt Service Reserves up to term of loan
Assessments Appraisal, Feasibility, Phase 1, Property Condition, Seismic, Environmental Assessments (if applicable)
Income Rent Roll and/or Pro Forma for previous 12 months
Borrower Experience Minimum of 3 projects completed
Credit 600+
Rates Contact Us
Origination 2% -4%
Payments Interest only payments (can be dutch or non-dutch)
Prepayment Penalty No prepayment penalty

*Renovation Money is escrowed for every loan to insure success for all parties involved. **LTV and Minimum down are subject to underwriting, geographical area, property rehab, borrower credit and expereience.***Loan amount will be the lessor of LTV and LTC

Get Approved